Quite often, the exchange of services or goods sold by individuals and legal entities without the participation of funds. This is a barter deal. With the advent of network technologies and modern vehicles, such a system has become global in nature. Most often, people interact through auctions or financial and trading markets.
History reference
Already in ancient times, the exchange of goods and services was very popular. The Phoenicians successfully applied this scheme of trade relations with other tribes. The Babylonian state was able to develop a special system in which not only food products, but also weapon devices for defense and attack became barter items.
In the Middle Ages, Europeans began to travel around the world to exchange some handicrafts for others. Colonial Americans received animal skins and wheat instead of muskets. After the advent of cash, barter exchanges became more organized.
Due to the lack of financial resources, commodity exchange became popular in the USA during the Great Depression. Almost half of the country had to be involved in this natural process. Citizens often united in special cooperatives that provide mutual assistance to each other.
The main advantages and disadvantages of the process
It is believed that a barter transaction is a fairly profitable operation in the absence of financial resources. The following advantages are characteristic of it:
- disposal of goods produced in excess;
- the formation of close relations between partners;
- expansion of the sphere of influence;
- the possibility of reducing costs due to the inevitable increase in prices.
Although conducting exchange transactions is a positive process, it should be noted that over time the practicality of this approach becomes less effective. The most important drawback is the difficulty in selecting and correlating products during the exchange, especially if the interests of the two parties do not completely coincide.
Why are companies forced to do this?
There are five main reasons that force enterprises to barter.
- Working capital deficit. The ability of the company to conclude financial transactions determines the enterprise’s output to the desired product. The absence of such an opportunity entails significant costs.
- The desire to expand or maintain the volume of products. The exchange of goods provides an opportunity to avoid a production decline, despite financial constraints.
- Ability to reduce taxes. Lack of transparency in transactions helps maintain informal relationships. If necessary, it is possible to hide the flows of goods to be exchanged.
- Improving the survival ability of an enterprise with increasing risks. This primarily applies to industry, where probable losses are the most frequent.
- Exclusion of the possibility of confiscation of assets in debt. Carrying out such operations complicates legal intervention in cases of bankruptcy, as there are no funds on the accounts of the enterprise.
Classification of operations
From the above it becomes clear which of the actions can be called a barter transaction in the literal sense of the word. However, such operations are not the same. There is their classification according to various criteria. This is necessary for a clear definition of legal norms.
From the point of view of contractual relations, transactions are divided into four types.
- Counterpurchase involves an assignment for the sale of manufactured products and the purchase of raw materials with funds received from another organization.
- Barter rent means the provision of equipment for a certain time period. Payment is made by goods made using borrowed technical equipment.
- Counter-delivery provides for the supply of finished equipment in exchange for source materials for it.
- Tolling is a way of receiving payment directly for the processing of the supplied raw materials.
It is possible to divide the natural exchange into direct and multilateral. In the first case, the operation ends with the acquisition by each side of the desired type of product. In a multilateral transaction, numerous manipulations occur with the participation of various business entities until everyone receives the necessary goods.
Requirements for Contracts
When a physical exchange is carried out with the participation of expensive products, a special document should be used confirming the procedure for conducting the operation. The agreement spells out the features of the transaction, as well as the rights and obligations of the parties.
Any contract must have:
- number and date of conclusion;
- execution in the form of a single document, not counting cases with operations concluded at the expense of international agreements;
- a list of goods or services, prices and delivery times, the procedure for making claims in case of non-compliance with the conditions.
Any barter agreement establishes for the subjects a regime of continuing relations, as a result of which compliance with obligations has a temporary duration. When exchanging goods without prior agreement, unpleasant consequences can occur that can lead to significant financial losses.
Existing difficulties
When a commodity exchange operation is carried out, immediately a problem looms before the parties regarding the minimization of the risks of untimely delivery of goods. In this case, it is a matter of fulfilling real obligations that are characteristic of all trade transactions. However, with barter, execution cannot be replaced by the payment of estimated income.
In practice, this problem is solved by developing special protection measures and introducing sanctions aimed at fulfilling certain obligations after violation of certain conditions. Directly in the contract, you can specify the simultaneity of deliveries or provide a delay period, after which the second counterparty is exempted from all agreements.
In addition, barter conditions can be expanded.
- Clauses on compensation for possible losses are included in the contract.
- Various methods are used to obtain guarantees of performance.
- The alleged risks are insured.
Mandatory prescribed options for resolving contentious issues. Many disagreements between the parties can be resolved through ordinary negotiations. If the conflict situation cannot be resolved in this way, then it is considered in court.
Order of registration
Since a barter transaction is one of the options for a trade relationship between two or more parties, it must be properly executed. This requirement is mandatory for organizations and individuals engaged in external marketing and acquisition of goods.
A foreign trade transaction passport is issued by sending an application to the appropriate authorities. It is necessary to attach to it:
- original of the concluded contract;
- certificate of state registration;
- copies of constituent documents;
- certificate of registration with the state statistics institution.
The application must be reviewed within 21 business days. The passport is issued in two copies: one of them is received by a representative of an individual or legal entity against signature, the other remains directly in the institution.
Barter economy within Russia
By the beginning of the 21st century, an extraordinary situation had formed on the territory of our country. Despite the existence of commercial banks, as well as a full-fledged monetary system, barter transactions became widespread. This is slightly surprising for a state in transition.
Due to the popularity of exchange transactions, barter centers in the regions have begun to actively develop, acting as intermediaries in conducting transactions. They receive applications from organizations located in certain territories. Such a system becomes quite effective in a crisis.
One of the main dilemmas that many Russian enterprises are currently unable to solve is cash shortages. In such a situation, only a civilized system of barter operations will save potential and survive difficult times with minimal losses.
The formation of modern barter trade allows you to successfully develop the field of information technology. The total volume of operations is gradually growing, although the demand for some types of goods is significantly reduced. The number of organizations surviving through the exchange of products is also increasing.
In conclusion
In any case, business people should understand which of the actions can be called a barter transaction and what benefits can be derived from this. Such operations will help many entrepreneurs and representatives of large organizations to get along without using financial instruments of economic development. The advantages of commodity exchange are obvious.